The
U.S. Securities and Exchange Commission (SEC) has requested a summary judgment
from a federal judge in its case against Do Kwon and Terraform Labs, in a move
aimed at avoiding a full trial. The SEC argues that there is “no genuine
dispute as to any material fact” in the case, emphasizing that Kwon and
Terraform sold securities.
The
SEC’s filing states that there is no dispute regarding the fact that purchasers
invested money, whether in fiat currency or crypto assets. This assertion
aligns with the regulator’s argument that Kwon and Terraform Labs offered
securities. The
case centers around whether the assets sold meet the criteria of an investment
contract under the Howey test, a legal assessment used to determine if a
transaction qualifies as an investment contract and can be considered a
security under U.S. federal law.
The
SEC contends that the pooling of money in a common enterprise with the
expectation of profits primarily derived from the efforts of promoters
satisfies the Howey test and justifies a judgment in favor of the SEC.
The
filing underscores that Terraform and Kwon engaged in fraudulent conduct and
made misleading statements. It alleges that they deceived investors about the
stability of UST, attributed its price stabilization to their algorithm while
secretly arranging third-party interventions, and omitted crucial information.
Terraform suffered a catastrophic collapse in May the previous year, resulting
in significant losses for investors.
In
response to the SEC’s motion, Do Kwon’s defense team has filed a similar
document, asserting that the SEC has failed to prove that they were offering
securities. Recently,
Terraform’s co-founder, Daniel Shin, who is on trial in South Korea, attributed
Terraform Labs’ downfall to Kwon’s mismanagement. Shin claimed he had distanced
himself from the company and its activities two years before its collapse.
Kwon
and Han’s Arrest in Montenegro
Finance Magnates stated that a
court in Montenegro
had handed down a four-month jail sentence to Kwon, for possessing forged
passports and travel documents. Han Chong-Joon, the former Chief Financial
Officer of the Singapore-based blockchain company, also faced the same charges
and received an identical sentence.
Kwon
and Han were arrested in March in Montenegro while attempting to travel to
Dubai via a private jet. The court revealed that fake Costa Rican and Belgian
passports, along with falsified identity cards, were confiscated from the two
executives.
This
sentencing follows several weeks after the court initially set bail at €400,000
for each of the offenders, Kwon and Han. However, the bail granted in May was
subsequently voided by an upper court, following an appeal by the prosecutor.
The appeal was made on the grounds that the executives’ property had not been
adequately assessed.
According
to Bloomberg, the
time that Kwon and
Han spent in detention will be taken into account in their sentence.
Additionally, the court has allowed them to appeal the verdict at a higher
court.
Kwon
informed the court that he obtained the forged travel documents from an agency
in Singapore, recommended to him by a friend. He further asserted that he was
not aware that the documents were forged. Terraform Labs’ CEO denied any
knowledge of the fraudulent nature of the documents.
The
U.S. Securities and Exchange Commission (SEC) has requested a summary judgment
from a federal judge in its case against Do Kwon and Terraform Labs, in a move
aimed at avoiding a full trial. The SEC argues that there is “no genuine
dispute as to any material fact” in the case, emphasizing that Kwon and
Terraform sold securities.
The
SEC’s filing states that there is no dispute regarding the fact that purchasers
invested money, whether in fiat currency or crypto assets. This assertion
aligns with the regulator’s argument that Kwon and Terraform Labs offered
securities. The
case centers around whether the assets sold meet the criteria of an investment
contract under the Howey test, a legal assessment used to determine if a
transaction qualifies as an investment contract and can be considered a
security under U.S. federal law.
The
SEC contends that the pooling of money in a common enterprise with the
expectation of profits primarily derived from the efforts of promoters
satisfies the Howey test and justifies a judgment in favor of the SEC.
The
filing underscores that Terraform and Kwon engaged in fraudulent conduct and
made misleading statements. It alleges that they deceived investors about the
stability of UST, attributed its price stabilization to their algorithm while
secretly arranging third-party interventions, and omitted crucial information.
Terraform suffered a catastrophic collapse in May the previous year, resulting
in significant losses for investors.
In
response to the SEC’s motion, Do Kwon’s defense team has filed a similar
document, asserting that the SEC has failed to prove that they were offering
securities. Recently,
Terraform’s co-founder, Daniel Shin, who is on trial in South Korea, attributed
Terraform Labs’ downfall to Kwon’s mismanagement. Shin claimed he had distanced
himself from the company and its activities two years before its collapse.
Kwon
and Han’s Arrest in Montenegro
Finance Magnates stated that a
court in Montenegro
had handed down a four-month jail sentence to Kwon, for possessing forged
passports and travel documents. Han Chong-Joon, the former Chief Financial
Officer of the Singapore-based blockchain company, also faced the same charges
and received an identical sentence.
Kwon
and Han were arrested in March in Montenegro while attempting to travel to
Dubai via a private jet. The court revealed that fake Costa Rican and Belgian
passports, along with falsified identity cards, were confiscated from the two
executives.
This
sentencing follows several weeks after the court initially set bail at €400,000
for each of the offenders, Kwon and Han. However, the bail granted in May was
subsequently voided by an upper court, following an appeal by the prosecutor.
The appeal was made on the grounds that the executives’ property had not been
adequately assessed.
According
to Bloomberg, the
time that Kwon and
Han spent in detention will be taken into account in their sentence.
Additionally, the court has allowed them to appeal the verdict at a higher
court.
Kwon
informed the court that he obtained the forged travel documents from an agency
in Singapore, recommended to him by a friend. He further asserted that he was
not aware that the documents were forged. Terraform Labs’ CEO denied any
knowledge of the fraudulent nature of the documents.
